Gold Price Forecast: XAU/USD lacks firm intraday direction, holds steady around $1,920

• Gold price lacks any firm intrada direction and oscillates in a narrow band on Tuesday.
• Subdued US Dollar price action and economic woes lend some support to the XAU/USD.
• Hawkish central banks continue to act as a headwind and cap gains for the yellow metal.

Gold price struggles to gain any meaningful traction on Tuesday and oscillates in a narrow trading band, around the $1,920 level through the Asian session. The XAU/USD, meanwhile, now seems to have found acceptance above the 200-hour Simple Moving Average (SMA) for the first time since June 16 and might look to build on the recent recovery from the $1,893 area, or a three-and-half-month low touched last Thursday.

Economic woes lend some support to safe-haven XAU/USD

The incoming weaker economic data from the United States (US) cast doubts about the need for further policy tightening by the Federal Reserve (Fed), which keeps the US Dollar (USD) bulls on the defensive and lends support to the Gold price. It is worth recalling that the US Bureau of Economic Analysis reported on Friday that the annual PCE Price Index decelerated to 3.8% in May from the 4.3% previous and the core gauge ticked down to 4.6% from 4.7% in April.

Furthermore, the Institute for Supply Management's (ISM) Manufacturing PMI dropped to the lowest level since May 2020 and came in at 46.0 for June. This marks the eighth straight month of contraction, which adds to worries about a global economic downturn and further seems to benefit the safe-haven Gold price. Despite the supporting factors, the XAU/USD remains below the one-week high touched on Monday, warranting caution before placing aggressive bullish bets.

Traders await this week’s key releases from United States

Given that the US markets will be closed in observance of Independence Day, relatively thin liquidity is holding back traders on the sidelines ahead of this week's key releases from the US. The minutes of the June Federal Open Market Committee (FOMC)meeting are due on Wednesday, which will be closely scrutinized for cues about the Fed's future rate-hike path. This will be followed by the US monthly jobs data - popularly known as the Nonfarm Payrolls (NFP) on Friday.

Hawkish central banks should act as a headwind for Gold price

in the meantime, bets for a 25 basis points (bps) rate hike at the next FOMC meeting on July 25-26, along with a more hawkish outlook adopted by major central banks, might continue to act as a headwind for the non-yielding Gold price. Apart from this, the recent risk-on rally across the global equity markets should further contribute to capping the upside for the safe-haven precious metal. This makes it prudent to wait for strong follow-through buying before confirming that the XAU/USD has formed a near-term bottom and positioning for any meaningful appreciating move.

Gold price technical outlook

From a technical perspective, the overnight swing high, around the $1,931 area now seems to act as an immediate hurdle. This is closely followed by the 100-day Simple Moving Average (SMA), currently around the $1,942 region, which if cleared decisively might trigger a short-covering rally. The Gold price might then accelerate the recovery towards the $1,962-$1,964 hurdle en route to the $1,970-$1,972 supply zone. Some follow-through buying should allow bulls to reclaim the $2,000 psychological mark and test the $2,010-$2,012 resistance.

On the flip side, immediate support is pegged near the $1,908-$1,907 area ahead of the $1,900 round-figure mark and the multi-month low, around the $1,893-$1,892 region touched last week. A convincing break below will make the Gold price vulnerable to accelerate the downward trajectory and expose the very important 200-day Simple Moving Average (SMA), currently around the $1,860 zone.

Key levels to watch